Calculate Health Factor, Loan-to-Value, and asset liquidation price for DeFi lending/borrowing. Manage risk on Aave, Compound, and other DeFi protocols.
Total USD value of your collateral
Total USD value borrowed
Protocol's liquidation threshold (e.g., 80% for ETH on Aave)
Current price per unit of collateral asset
Health factor measures your position's safety. It's calculated as (Collateral × Liquidation Threshold) ÷ Borrowed Amount. A health factor below 1.0 means your position can be liquidated. Keep it above 2.0 for safety.
LTV shows how much you've borrowed relative to your collateral value. It's calculated as (Borrowed ÷ Collateral) × 100. Lower LTV means safer position. Example: $5,000 borrowed against $10,000 collateral = 50% LTV.
The maximum LTV before liquidation. Each asset has its own threshold set by the protocol. ETH might have 80% threshold, stablecoins 85-95%. When your LTV reaches this threshold, you get liquidated.
The price at which your collateral asset would trigger liquidation. Calculated as: Collateral Price × (Borrowed ÷ Collateral) ÷ (Threshold ÷ 100). Monitor this closely - if your asset hits this price, liquidation occurs automatically.
The recommended maximum amount to borrow, typically 80% of the liquidation threshold. This provides safety margin. For $10,000 collateral with 80% threshold, safe limit is $6,400 (versus $8,000 maximum).
If liquidated, you lose 5-15% of your collateral value as penalty, plus gas fees. A $10,000 position could lose $500-1,500. Always maintain health factor above 1.5 to avoid this!
Enter the total USD value of your deposited collateral. Example: 5 ETH at $2,000 each = $10,000. This is the amount securing your loan.
Enter how much you've borrowed or plan to borrow in USD. Example: $5,000 in USDC or DAI. Enter 0 if you're just checking your borrowing capacity.
Find this on your lending platform. Aave: ETH is 82.5%, WBTC is 75%, stablecoins 85-90%. Compound: typically 75-85%. MakerDAO (DAI): 150% (input as 66.67%).
Enter the current price of your collateral asset. Example: ETH at $2,000, BTC at $30,000, or $1.00 for stablecoins. This helps calculate liquidation price.
You'll see: Health Factor (safety measure), LTV (utilization %),Liquidation Price (danger zone), and Safe Borrow Limit (recommended max).
Aave: Asset page shows "Liquidation threshold"
Compound: Docs show "Collateral factor"
MakerDAO: Shows "Minimum Collateralization Ratio"
You have $10,000 in ETH collateral (5 ETH at $2,000 each), borrowed $5,000 USDC, on Aave with 82.5% liquidation threshold:
Result: Health Factor 1.65, LTV 50%, Liquidation at $1,212 per ETH (-39% drop), Safe limit $6,600
LTV = (Borrowed Value ÷ Collateral Value) × 100
Example: ($5,000 ÷ $10,000) × 100 = 50%
HF = (Collateral × Threshold ÷ 100) ÷ Borrowed
Example: ($10,000 × 80 ÷ 100) ÷ $5,000 = 1.6
LP = Price × (Borrowed ÷ Collateral) ÷ (Threshold ÷ 100)
Example: $2,000 × 0.5 ÷ 0.8 = $1,250
Safe Limit = Collateral × (Threshold ÷ 100) × 0.8
Example: $10,000 × 0.8 × 0.8 = $6,400
Buffer = (Current Price - Liquidation Price) ÷ Current Price
Example: ($2,000 - $1,250) ÷ $2,000 = 37.5%
Max = Collateral × (Threshold ÷ 100)
Example: $10,000 × 0.8 = $8,000 (risky!)
• HF ≥ 3.0: Very Safe - Can withstand 66%+ price drop
• HF 2.0-3.0: Safe - Can handle 50%+ price drop
• HF 1.5-2.0: Moderate - Can survive 33%+ price drop
• HF 1.2-1.5: Elevated Risk - Only 20-33% buffer
• HF 1.0-1.2: High Risk - Less than 20% buffer
• HF < 1.0: Liquidation Zone - Position being liquidated!
HF of 2.0 means your collateral can drop 50% before liquidation. This protects against flash crashes and normal market volatility. Never let HF drop below 1.5, even temporarily.
Use CoinGecko, CoinMarketCap, or TradingView to alert you when your collateral asset approaches liquidation price. Set alerts at +15% and +25% above liquidation price for early warning.
Always have extra collateral or stablecoins available to deploy quickly. During crashes, network congestion can make transactions expensive and slow. Prepare in advance.
Borrowing stablecoins against stablecoin collateral eliminates price risk. You can borrow at 85-95% LTV safely. Great for farming, liquidity provision, or earning yield.
Protocols can change liquidation thresholds through governance votes. Follow protocol announcements, Twitter, and Discord. A threshold reduction directly impacts your health factor.
Different protocols use different liquidation systems. Aave uses Dutch auctions, Compound uses fixed discounts. Some allow partial liquidations, others liquidate entire positions.
✅ Maintain health factor above 2.0
✅ Set price alerts at liquidation + 20%
✅ Keep emergency collateral ready
✅ Check position daily in volatile markets
✅ Understand your protocol's liquidation system
✅ Know liquidation penalties (5-15%)
✅ Use DeFi dashboards for monitoring
✅ Have gas funds for emergency transactions
Features: Flash loans, rate switching, isolation mode
ETH Threshold: 82.5% | USDC: 87%
Liquidation: 5% penalty, Dutch auction system
Best for: Advanced DeFi users, diverse assets
Features: Simple interest, COMP rewards
ETH Factor: 82.5% | USDC: 85%
Liquidation: 8% penalty, open liquidation
Best for: Beginners, straightforward borrowing
Features: DAI minting, Stability Fee
ETH-A: 170% ratio (58.8% LTV)
Liquidation: 13% penalty, vault auctions
Best for: DAI generation, conservative borrowing
Features: Stablecoin-focused, low fees
Stablecoin LTV: Up to 95%
Liquidation: Soft liquidation, gradual
Best for: Stablecoin pairs, low-risk yield
Features: Peer-to-peer matching, optimized rates
LTV: Inherits from Aave/Compound
Liquidation: Same as underlying protocol
Best for: Better rates, same security
Features: Cross-chain lending, Aave fork
LTV: Similar to Aave (75-87%)
Liquidation: 5-10% penalty
Best for: Multi-chain strategies
Consider:
• Asset support and liquidity
• Liquidation thresholds and penalties
• Interest rates for borrowing
Priority:
• Protocol security and audits
• Liquidation mechanism transparency
• Community and governance activity
If your health factor drops below 1.0, your position gets liquidated automatically. You lose 5-15% of collateral value plus gas fees. This is irreversible. Always maintain HF above 1.5.
Crypto prices can drop 20-50% in hours during crashes. Your health factor drops proportionally. During extreme volatility, network congestion makes it hard to add collateral quickly.
Bugs or exploits in lending protocols can drain funds. Even audited protocols aren't immune. Only use established protocols with years of track record and multiple audits.
Protocols rely on oracles (like Chainlink) for price data. Oracle failures or manipulation can trigger incorrect liquidations. This happened to several protocols during flash crashes.
During crashes, Ethereum gas fees spike to $100-500+ per transaction. This makes emergency collateral additions expensive and slow. Keep extra gas reserves.
When prices crash, mass liquidations occur simultaneously. This creates selling pressure, dropping prices further, triggering more liquidations. The March 2020 "Black Thursday" demonstrated this.
Protocol governance can vote to change liquidation thresholds, penalties, or supported assets. These changes can affect your position. Stay informed about governance proposals.
If liquidations don't cover borrowed amounts (during extreme volatility), protocols accumulate "bad debt." This can affect lenders' ability to withdraw and protocol solvency.
DeFi lending and borrowing have complex tax implications that vary by jurisdiction. Borrowing itself is typically not taxable, but liquidations, repayments, and collateral movements may trigger taxable events. Interest paid is generally not tax-deductible (unlike mortgage interest). Consult a crypto tax professional.
DeFi taxation is evolving rapidly with new IRS guidance and international regulations. A crypto-specialized tax professional can help you navigate complex scenarios like liquidations, cross-chain transfers, and protocol interactions. The cost of professional advice is minimal compared to potential penalties for incorrect reporting. Different jurisdictions treat DeFi lending differently - US, EU, and other regions have varying rules.